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Moneyfarm has run away with it – the clear winner! It’s much cheaper, has a significantly better investment track record, the app is great to use, and there's investment advisors to help you too. Moneyfarm is our winner.
Looking to invest your hard earned money with a ‘robo advisor’, or put more simply, an investment app. Well, you’ve picked some great options with Moneyfarm and Nutmeg, but which one is better? Let’s find out.
They’re both digital wealth managers. Which means they aim to grow your money over the long-term, but interact with you via technology, rather than face-to-face, or over the phone, like a traditional wealth manager.
Having said that, Moneyfarm does have real advisors to help you make the right decisions, in addition to all the technology. Which is a pretty big deal! It’s the best of both worlds, an app, plus a traditional wealth manager.
They’re both super simple to use, all you have to do is add your money, and they’ll handle the rest. Wealth management apps are very good options for long-term investing, and highly recommended (experts know how to make money).
The downside to both is you have to start with at least £500. If you want to start with less than that, check out Chip¹ – you can start with as little as £1, and it’s a great investment app. Here’s our Chip review to learn more.
If you’re just here for the winner, it’s Moneyfarm – and by quite a distance. Here’s the Moneyfarm website¹ to get started.
If you want to learn why, let’s dive into the details a bit more of Moneyfarm vs Nutmeg.
Moneyfarm and Nutmeg are both super simple to get started and use. You don’t need to know a thing about investing to get started, both will handle everything for you after running through a few initial questions. However you do need to know which investment account you want (e.g. pension, ISA) – more on those later.
They’re both available on their websites, and as mobile apps – on both Apple and Android devices, and in fact both very highly rated.
Moneyfarm is rated 4.7 out of 5 on Apple, and 4.4 on Android.
Nutmeg is rated 4.8 out of 5 on Apple, and 4.4 on Android.
That’s pretty amazing scores for both Moneyfarm and Nutmeg!
After you’re set up, they’re both super easy to use, you can check your portfolio (total money invested), and the performance (how much your portfolio has grown, or not).
However there’s one massive difference here, with Moneyfarm, you get an actual real person, a fully qualified consultant, who you can chat with about your personal circumstances and they’ll guide you to the best decision for you (that’s only if you want to speak to someone). With Nutmeg there’s no support, you’re by yourself.
And for that reason, we’re giving this one to Moneyfarm. It’s pretty great.
Winner: Moneyfarm
When it comes to investing in general in the UK, there’s quite a few account options for investing – particularly tax-free options!
We won’t cover all the different account benefits now, but with both Moneyfarm and Nutmeg, you’ve got all the popular account types:
And with Nutmeg, you’ve got the addition of a Lifetime ISA (to save for your first home).
As Nutmeg offers a Lifetime ISA, which is pretty handy for saving for your first home, we’re giving this round to them. However, there are other options out there if you’re looking for this. Here’s where to find the best Lifetime ISAs.
In fact, when it comes to pensions, you’ve got a lot of options too. Here’s the best personal pensions. Our clear winner for pensions is PensionBee¹, they only focus on pensions and make it super easy. If that sounds interesting, check out our PensionBee review.
Winner: Nutmeg
Next you choose how you want to invest your money within your investment account (e.g. Stocks & Share ISA).
With Nutmeg, you’ve got 4 options:
With Moneyfarm, you’ve got:
And within each investment portfolio option, you’ve got a range of risk options, from low risk to very high risk (don't let the word risk put you off). The higher the risk level is, the more your money could grow over the long-term. However, in the short-term it can go up and down more (called volatility), but ultimately the aim is to grow much more than lower risk options. Make sense?
So, pretty similar overall, except Nutmeg offers an extra option, ‘Smart Alpha’, which uses experts from J.P. Morgan rather than just experts from Nutmeg.
‘Smart Alpha’ is great if you’d prefer your money being looked after by a large, established corporation like J.P. Morgan (they’ve been around for 150 years). However it doesn’t mean your money will grow more, in fact it’s performed very badly and has actually lost money. It also has higher fees.
So overall then, Nutmeg does have one more option, but based on the investment performance, it’s not a good one, and it has higher fees. So we’re going to give this one to Moneyfarm – which has easy to understand options.
We’re also going to look at the socially responsible option in more detail below.
Winner: Moneyfarm
If you’re like us, you’re a big fan of investing your money responsibly, somewhere good that helps to fight climate change and improve the world in general, or at least doesn’t damage it further!
Well, with both Moneyfarm and Nutmeg, you’ve got socially responsible options. There’s one option on both platforms, so simply select that option when you get started, as simple as that.
The Moneyfarm option is a bit stricter in terms of where investments go – it has 100% compliance with environmental, social and governance criteria (ESG), set by the UN Global Compact strategy.
With Nutmeg, there’s a bit less of a focus, and they simply ‘lean towards’ ESG standards with their socially responsible portfolio.
And what you might not know is Nutmeg is owned by J.P. Morgan Chase. They are one of the largest banks in the world, and pursue profit at all costs – they are one of the leading banks that invest in fossil fuel companies, and have invested £100 billions into the fossil fuel industry in recent years. Not cool.
If you’re a responsible investor, there’s only one option here, Moneyfarm. Here’s where to learn more about Moneyfarm’s socially responsible portfolio¹.
Winner: Moneyfarm
Costs are pretty important when it comes to investing, they can eat away at your profits, so lower fees means more money for you – however only if the investment performance is the same.
That’s why we don’t recommend making investment provider decisions based on fees alone (unless you know the investments will be exactly the same).
So with fees, the fee structure is the same for both Moneyfarm and Nutmeg – you’ll pay a management fee (which is Moneyfarm’s or Nutmeg’s own fee), and then fees as part of the actual investments themselves, which are called fund fees (fees on the investment funds), and spread fees (fees buying and selling the funds).
The investment fees are effectively the same with both platforms, which are 0.30%, and can fluctuate up and down a bit.
The important fee is the management fee, and this starts at 0.75% with both platforms.
The key difference is with Moneyfarm this fee reduces as your savings grow – and the lower fee applies to all the money you have saved. Whereas with Nutmeg, you’ll have to save £100,000 before this fee reduces, and it just reduces on the amount above that. Let’s take a deeper look:
Although Nutmeg may appear simpler in terms of fees, Moneyfarm is actually quite a bit cheaper.
Moneyfarm fees scale down, and the lower fee applies to all of your money. Which has a big impact on the ultimate price – and it’s also cheaper however much money you have saved.
Although you’re probably not going to have this much saved (for a while!), let’s say you have £250,000 saved, with Moneyfarm the total fee would be 0.40%, which is great. And with Nutmeg, you might think it’s cheaper initially, with a 0.35% fee. However, this only applies to the portion above £100,000, everything below that you are still paying 0.75%. Which means the average fee is actually higher than Moneyfarm (at 0.51%).
With the cheaper fixed allocation portfolios. You’ll pay a bit less, but the same pricing structure applies, which makes Moneyfarm cheaper. Here’s what you’ll pay:
Overall then, Moneyfarm is cheaper, and actually by quite a bit! We’re giving this round to Moneyfarm.
By the way, if you head to the Moneyfarm website¹, they’ve got a calculator which will tell you the exact amount you’ll pay.
Winner: Moneyfarm
Past investment performance is important to consider, but remember it’s not a guarantee of good future performance.
Let’s take a popular type of investment, an average risk level investment option and look at how both perform vs the industry standard.
Let’s take a look at the average risk level option as a comparison (which is one of the most common options customers opt for).
With Moneyfarm, their performance has been great, despite the downturn in the markets.
Over the last 5 years, Moneyfarm has returned 12.9% in total (and even better over a longer time period).
With Nutmeg, they’ve returned just 3.7% in total over the last 5 years. Ouch. That’s an average of 0.7% per year.
It’s the same scenario with the highest risk option too. With Moneyfarm you would have made 33%, and with Nutmeg 26.7%.
In fact, whichever risk level you choose to invest with, Moneyfarm performs better. Particularly with the lower risk options – where Nutmeg has actually lost money on all of them.
There’s a very clear winner here and that's Moneyfarm! There’s more information on the investment performance on the Moneyfarm website¹.
(Data correct as of October 2022).
Winner: Moneyfarm
To compare the customer service and overall customer satisfaction, it’s a good idea to look at the customer reviews. We’ll use Trustpilot to do this.
With Nutmeg, the rating is low, just 3.6 out of 5, and from over 1,000 reviews. There’s lots of complaints about customer service and the very poor investment performance. The app itself gets good reviews. This is pretty much our view too.
With Moneyfarm, it has an excellent rating of 4.4 out of 5, from over 750 reviews. That’s way better than Nutmeg! Customers love all of Moneyfarm – the ease of use, customer service, investment performance and the advisors.
That’s another clear win for Moneyfarm!
Winner: Moneyfarm
Moneyfarm has run away with it here!
It’s a clear winner, on almost every criteria. It’s easier to use and has the addition of investment advisors who can support you with the right investment decisions for you (for no extra charge).
It’s cheaper overall too, and by quite a bit. And when it comes to the investment performance, Nutmeg is considerably worse, they’ve even lost money. Moneyfarm performance is fantastic, in fact, one of, if not, the best out there for an investment app.
Also when it comes to socially responsible investing, you can’t be owned by one of the biggest fossil fuel investors in the world, and pretend you are offering socially responsible investing. Plus, Moneyfarm’s socially responsible portfolio is much stricter and 100% compliant with ESG standards.
Nutmeg is better than a lot of the traditional investment firms, but when compared to Moneyfarm it's a distant second!
If you want to learn more, here’s our Moneyfarm review and the Moneyfarm website¹ to get started.
This article was written by the team at Nuts About Money, and fact-checked by 2 independent reviewers. You’re in safe hands.